COLUMBUS, Ind., Jan. 27 /PRNewswire-FirstCall/ -- Indiana Community Bancorp (the "Company") (Nasdaq: INCB), the holding company of Indiana Bank and Trust Company of Columbus, Indiana (the "Bank"), today announced 2008 annual earnings of $5,003,000 or $1.47 diluted earnings per common share compared to $6,123,000 or $1.72 diluted earnings per common share a year earlier. The reduction in year to date net income was primarily due to an increase in the provision for loan losses which totaled $4.3 million for 2008 compared to $1.4 million for 2007. During the year, non-performing assets increased $15.9 million to $27.7 million; non-performing assets increased $12.0 million during the fourth quarter. The Company had fourth quarter earnings of $1,509,000 or $0.43 diluted earnings per common share compared to $1,642,000 or $.47 diluted earnings per common share a year earlier. Total loans increased $50.9 million for the year while total deposits increased $3.1 million. In December 2008, the Company bolstered its capital position by issuing $21.5 million in preferred stock and warrants to the United States Treasury Department. As a result, total shareholders' equity increased $24.6 million for the year to $92.0 million at December 31, 2008 representing a total risk based capital ratio of 13.2%. Chairman and CEO John Keach, Jr. stated, "Concerns regarding national and local economic issues have resulted in a very difficult operating environment. We are pleased that we have remained profitable during this challenging cycle. We will continue to focus on core commercial and retail banking activities in the communities we serve." Executive Vice President and CFO Mark Gorski added, "We have implemented several cost cutting strategies which are important to the success of our Company during these difficult times."

Balance Sheet

Total assets were $969.4 million as of December 31, 2008, an increase of $60.6 million from December 31, 2007. Total loans increased $5.7 million for the quarter and $50.9 million for the year. The growth in the loan portfolio was primarily the result of an increase in commercial and commercial mortgage loans. During the year, commercial loans increased $14.2 million and commercial mortgage loans increased $65.3 million for a total increase in commercial loans of $79.5 million. Growth during the fourth quarter slowed significantly when compared to the first three quarters as total commercial and commercial mortgage loans increased $8.5 million during the fourth quarter. The growth in commercial loans slowed due to increasingly negative local economic factors. Residential mortgage loans have decreased $22.3 million for the year as substantially all new mortgage loan originations are being sold in the secondary market. Other consumer loans have decreased $6.8 million for the year due primarily to a reduction in indirect automobile loans as the Bank discontinued the origination of indirect automobile loans during 2006.

Total retail deposits increased $5.5 million for the quarter and decreased $3.4 million for the year. During 2008, commercial checking accounts increased $3.2 million while retail certificates of deposit increased $13.3 million. These increases were offset by a decrease in retail money market account balances totaling $24.6 million for the year.

Total FHLB borrowings increased $35.3 million for the year and public fund certificates of deposit increased $10.2 million for the year. The increases in FHLB borrowings and public fund certificates of deposit were necessary to provide funding for loan growth during the year.

As of December 31, 2008, shareholders' equity was $92.0 million. The increase in shareholders' equity of $24.6 million for the year was primarily due to the issuance of $21.5 million in preferred stock and warrants to the United States Treasury Department. The Company also increased retained earnings by reducing its quarterly dividend to $.12 per share beginning in the third quarter thus increasing retained earnings by approximately $250,000 per quarter when compared to previous dividend levels. The return on average assets for the year was 0.54% while the return on average equity for the year was 7.11%.

Asset Quality

Provision for loan losses increased $449,000 to $1.0 million for the fourth quarter and increased $2.9 million to $4.3 million for the year. The increase in provision for loan losses was primarily due to increases in non-performing loans and increased charge offs. Net charge offs were $2.7 million for 2008 compared to $986,000 for 2007. The net charge off ratio for 2008 was 0.35% compared to 0.14% for 2007. Non-performing assets totaled $27.7 million at December 31, 2008, an increase of $15.9 million during the year. The increase in the non-performing assets during the year was primarily the result of four commercial loan relationships totaling approximately $13.9 million that were placed on non-accrual status during the year along with an increase in consumer loan delinquencies. The ratio of the allowance for loan losses to total loans was 1.07% at December 31, 2008 compared to 0.92% at December 31, 2007.

Net Interest Income

Net interest income increased $328,000 or 4.7% to $7.2 million for the fourth quarter while annual net interest income increased $1.2 million or 4.5% to $28.8 million. Net interest margin for the fourth quarter of 2008 was 3.28%, which represented a decrease of 23 basis points compared to the third quarter of 2008. Net interest margin for 2008 was 3.35% compared to 3.45% for 2007 -- a 10 basis point decrease. Net interest margin has been fluctuating significantly from quarter to quarter due to rapid changes in interest rates. Beginning in September 2007, the Federal Reserve cut interest rates 10 times for a total reduction in the target federal funds rate of 5.0% to the current level of 0.25% at the end of 2008.

Non Interest Income

Non interest income decreased $693,000 to $2.7 million for the fourth quarter and decreased $914,000 to $11.9 million year-to-date. The primary reason for the decrease during the fourth quarter related to a reduction in brokerage fees of $491,000. During the third quarter, the Company chose to discontinue offering brokerage services through Raymond James and the brokerage business was sold to the brokers who had been serving these customers. In addition to reductions due to the sale of the brokerage business, the year-to-date non interest income total was negatively impacted by the Bank's recognition of an impairment charge of $437,000 related to an investment in the AMF Ultra Short Mortgage Fund. The Bank redeemed its shares in the Fund for cash and securities during the third quarter.

Non Interest Expenses

Non interest expenses decreased $729,000 or 10.0% to $6.6 million for the fourth quarter while year-to-date non interest expenses decreased $940,000 to $28.8 million. Excluding the impact of the one-time employee related expense and the write-down of the Bank's former operations building incurred in 2007, expenses increased $48,000 year-to-date. Compensation and employee benefits expense decreased $718,000 or 17.4% for the fourth quarter and $583,000 or 3.6% year-to-date. Over the past three quarters, the Company has decreased the expense related to the defined benefit pension plan, reduced the Company's overall workforce by approximately 10% and sold the brokerage business. The Company froze its defined benefit pension plan effective April 1, 2008 which decreased expense by approximately $700,000 annually. During the third quarter, the Company announced a workforce reduction of 26 positions or approximately 10% of the Company's workforce. This workforce reduction was completed during the third quarter. Severance costs associated with the workforce reduction were included in expense for the third quarter. Management anticipates a cost savings of approximately $750,000 annually related to the workforce reduction beginning in the fourth quarter. As a result of the sale of the brokerage business, management estimates a cost savings of approximately $1.1 million annually in commission and salary expense. The efficiency ratio decreased to 70.1% for 2008 as compared to 71.3% for 2007 and the ratio was 66.3% for the fourth quarter of 2008.

Stock Repurchase Program

In January 2008, the Board of Directors approved the thirteenth repurchase, from time to time, on the open market of up to 5% of the Company's outstanding shares of common stock, without par value ("Common Stock"), or 168,498 such shares. Such purchases were to be made subject to market conditions in open market or block transactions. The Company repurchased 11,886 shares under this plan during the first quarter. There were no shares repurchased since the first quarter as the Company has suspended its stock repurchase thereby retaining capital based on the current economic environment. Because of the Company's receipt of TARP capital, future repurchases will require approval of the Treasury Department while it continues to hold preferred stock, warrants or common stock of the Company.

Indiana Community Bancorp is a bank holding company registered with the Board of Governors of the Federal Reserve System (the "Federal Reserve"), which has been authorized by the Federal Reserve to engage in activities permissible for a financial holding company. Indiana Bank and Trust Company, its principal subsidiary, is an FDIC insured state chartered commercial bank. Indiana Bank and Trust Company was founded in 1908 and offers a wide range of consumer and commercial financial services through 20 branch offices in central and southeastern Indiana.

Forward-Looking Statement

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include expressions such as "expects," "intends," "believes," and "should," which are necessarily statements of belief as to the expected outcomes of future events. Actual results could materially differ from those presented. Indiana Community Bancorp undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release. The Company's ability to predict future results involves a number of risks and uncertainties, some of which have been set forth in the Company's most recent annual report on Form 10-K and its most recent quarterly report on Form 10-Q which disclosures are incorporated by reference herein.





    INDIANA COMMUNITY BANCORP
    CONSOLIDATED BALANCE SHEETS
    (dollars in thousands except share data)
    (unaudited)

                                                    December 31,  December 31,
                                                        2008          2007
    Assets:
        Cash and due from banks                       $22,352       $20,082
        Interest bearing demand deposits                  234        20,470
                                                     --------      --------
    Cash and cash equivalents                          22,586        40,552
                                                     --------      --------
    Securities available for sale at fair value
     (amortized cost $90,957 and $62,551)              91,096        62,306
    Securities held to maturity at amortized cost
     (fair value $3,884 and $1,558)                     4,467         1,557
    Loans held for sale (fair value $2,907 and $7,250)  2,856         7,112
    Portfolio loans:
        Commercial loans                              221,766       207,590
        Commercial mortgage loans                     334,367       269,035
        Residential mortgage loans                    120,227       142,481
        Second & home equity loans                    104,084       103,560
        Other consumer loans                           20,532        27,345
        Unearned income                                  (241)         (165)
                                                     --------      --------
    Total portfolio loans                             800,735       749,846
    Allowance for loan losses                          (8,589)       (6,972)
                                                     --------      --------
    Portfolio loans, net                              792,146       742,874
    Premises and equipment                             15,323        15,599
    Accrued interest receivable                         3,777         4,670
    Goodwill                                            1,394         1,875
    Other assets                                       35,728        32,261
                                                     --------      --------
    Total Assets                                     $969,373      $908,806
                                                     ========      ========

    Liabilities and Shareholders' Equity:
    Liabilities:
    Deposits:
       Demand                                         $71,726       $69,728
       Interest checking                              110,944       103,624
       Savings                                         40,862        37,513
       Money market                                   156,500       185,803
       Certificates of deposit                        314,425       301,146
                                                     --------      --------
    Retail deposits                                   694,457       697,814
                                                     --------      --------
    Brokered deposits                                   5,420         9,174
    Public fund certificates                           10,762           563
                                                     --------      --------
    Wholesale deposits                                 16,182         9,737
                                                     --------      --------
    Total deposits                                    710,639       707,551
                                                     --------      --------
    FHLB borrowings                                   134,639        99,349
    Short term borrowings                                   0            20
    Junior subordinated debt                           15,464        15,464
    Other liabilities                                  16,619        18,968
                                                     --------      --------
    Total liabilities                                 877,361       841,352
                                                     --------      --------

    Commitments and Contingencies

    Shareholders' equity:
        No par preferred stock; Authorized:
         2,000,000 shares Issued and outstanding:
         21,500 and none                               20,962             0
        No par common stock; Authorized:
         15,000,000 shares Issued and outstanding:
          3,358,079 and 3,369,965 shares               20,985        20,305
        Retained earnings, restricted                  50,670        48,089
        Accumulated other comprehensive loss, net        (605)         (940)
                                                     --------      --------
    Total shareholders' equity                         92,012        67,454
                                                     --------      --------
    Total Liabilities and Shareholders' Equity       $969,373      $908,806
                                                     ========      ========



    INDIANA COMMUNITY BANCORP
    CONSOLIDATED STATEMENTS OF INCOME
    (in thousands, except share and per share data)
    (unaudited)                      Three Months Ended       Year to Date
                                        December 31,          December 31,
                                       2008       2007       2008       2007
    Interest Income:
    Short term investments              $12       $199       $462     $1,116
    Securities                          815        693      2,878      2,688
    Commercial loans                  2,923      3,791     12,670     14,538
    Commercial mortgage loans         4,960      4,503     18,736     16,766
    Residential mortgage loans        1,897      2,478      8,516     10,471
    Second and home equity loans      1,454      1,836      6,186      7,342
    Other consumer loans                437        544      1,890      2,280
                                   --------   --------   --------   --------
    Total interest income            12,498     14,044     51,338     55,201
                                   --------   --------   --------   --------

    Interest Expense:
    Checking and savings accounts       308        463        981      1,761
    Money market accounts               611      1,611      2,867      5,869
    Certificates of deposit           2,760      3,592     12,265     14,317
                                   --------   --------   --------   --------
     Total interest on retail
      deposits                        3,679      5,666     16,113     21,947
                                   --------   --------   --------   --------

    Brokered deposits                    91        113        426        665
    Public funds                         76          6        185         47
                                   --------   --------   --------   --------
     Total interest on wholesale
      deposits                          167        119        611        712
                                   --------   --------   --------   --------
     Total interest on deposits       3,846      5,785     16,724     22,659
                                   --------   --------   --------   --------

    FHLB borrowings                   1,234      1,054      5,059      3,884
    Other borrowings                      0          0          1          8
    Junior subordinated debt            171        286        765      1,110
                                   --------   --------   --------   --------
    Total interest expense            5,251      7,125     22,549     27,661
                                   --------   --------   --------   --------

    Net interest income               7,247      6,919     28,789     27,540
    Provision for loan losses         1,021        572      4,292      1,361
                                   --------   --------   --------   --------
    Net interest income after
     provision for loan losses        6,226      6,347     24,497     26,179
                                   --------   --------   --------   --------

    Non Interest Income:
     Gain on sale of loans              288        390      1,446      1,497
     Loss on securities                   0          0       (437)         0
     Investment advisory services         0        491      1,371      1,874
     Service fees on deposit accounts 1,740      1,692      6,791      6,574
     Loan servicing income, net of
      impairment                        138        145        551        571
     Miscellaneous                      528        669      2,218      2,338
                                   --------   --------   --------   --------
    Total non interest income         2,694      3,387     11,940     12,854
                                   --------   --------   --------   --------

    Non Interest Expenses:
     Compensation and employee
      benefits                        3,411      4,129     15,843     16,426
     Occupancy and equipment          1,012      1,070      4,159      4,086
     Service bureau expense             483        414      1,917      1,637
     Marketing                          180        268      1,241      1,141
     Miscellaneous                    1,501      1,435      5,674      6,484
                                   --------   --------   --------   --------
    Total non interest expenses       6,587      7,316     28,834     29,774
                                   --------   --------   --------   --------

    Income before income taxes        2,333      2,418      7,603      9,259
    Income tax provision                824        776      2,600      3,136
                                   --------   --------   --------   --------
    Net Income                       $1,509     $1,642     $5,003     $6,123
                                   ========   ========   ========   ========
    Basic earnings per common share   $0.43      $0.48      $1.47      $1.75
    Diluted earnings per common
     share                            $0.43      $0.47      $1.47      $1.72

    Basic weighted average number
     of shares                    3,358,079  3,433,670  3,359,666  3,492,615
    Dilutive weighted average
     number of shares             3,358,079  3,473,101  3,365,131  3,560,603
    Dividends per share              $0.120     $0.200     $0.640     $0.800



    Supplemental Data:               Three Months Ended        Year to Date
    (unaudited)                          December 31,          December 31,
                                        2008      2007        2008      2007
    Weighted average interest
     rate earned on total
     interest-earning assets            5.65%     6.86%       5.97%     6.91%
    Weighted average cost of total
     interest-bearing liabilities       2.42%     3.52%       2.68%     3.53%
    Interest rate spread during period  3.24%     3.34%       3.29%     3.38%

    Net interest margin
     (net interest income divided by
      average interest-earning assets
      on annualized basis)              3.28%     3.38%       3.35%     3.45%
    Total interest income divided by
     average total assets (on
     annualized basis)                  5.22%     6.33%       5.51%     6.31%
    Total interest expense divided by
     average total assets (on
     annualized basis)                  2.18%     3.18%       2.42%     3.16%
    Net interest income divided by
     average total assets (on
     annualized basis)                  3.03%     3.12%       3.09%     3.15%

    Return on assets (net income
     divided by average total assets
      on annualized basis)              0.63%     0.74%       0.54%     0.70%

    Return on equity (net income
     divided by average total equity
      on annualized basis)              8.03%     9.58%       7.11%     8.88%



                                                 December 31,     December 31,
                                                     2008             2007

    Book value per common share outstanding         $20.98           $20.02

    Nonperforming Assets:
    Loans: Non-accrual                             $22,534          $10,516
           Past due 90 days or more                    518               64
           Restructured                              1,282              874
                                                  --------         --------
    Total nonperforming loans                       24,334           11,454
    Real estate owned, net                           3,335              286
    Other repossessed assets, net                       44               25
                                                  --------         --------
    Total Nonperforming Assets                     $27,713          $11,765

    Nonperforming assets divided by total assets     2.86%            1.29%
    Nonperforming loans divided by total loans       3.03%            1.51%

    Balance in Allowance for Loan Losses            $8,589           $6,972

SOURCE Indiana Community Bancorp